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SC Coordination

SC Coordination

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Published by: api-3750011 on Oct 18, 2008
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03/18/2014

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The Bullwhip Effect and
the Need for Coordination
in Supply Chains

(based on Chpt. 16 of Chopra and Meindl)
The Bullwhip Effect
\u2022Fluctuation in orders increase as they move up the supply chain
(see Fig.16.1)

\u2022Demand information is distorted as it travels within the supply
chain, so that different stages have different perspectives and
estimates of the chain demand

\u2022Examples:
\u2013Proctor & Gamble Pampers diapers
\u2013HP printers

\u2022Trying to run each stage of the SC based on this partial
distorted demand information can have dire consequences for
all parties involved!

The effect of lack of coordination on
performance

\u2022Manufacturing cost\u2191
\u2022Inventory cost\u2191
\u2022Replenishment lead time\u2191
\u2022Transportation cost\u2191
\u2022Labor cost for shipping and receiving\u2191
\u2022Level of product availability\u2193
\u2022Relationships across the supply chain #@#*&@*!
\u2022Profitability\u2193

\u2022Remark: All of the above essentially result from theincreas ed
variability experienced by certain parts of the supply chain, due
to information distortion and lack of coordination.

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